Toledo area firms shares beaten down

7/6/2008

IN LINE with national trends, the stocks of publicly traded companies in northwest Ohio and southeast Michigan were pummeled during the first half of this year.

Led by Dana Holding Corp., Libbey Inc., and Cooper Tire & Rubber Co. all of which had share-value declines of more than 50 percent the 17 major firms in the region collectively posted a drop in stock value of 15 percent.

Just three firms, Tecumseh Products Co., building products manufacturer Owens Corning, and real estate trust Health Care REIT Inc. had gains.

Particularly hard hit were banks. Total share returns of the five publicly traded banks in the region were down 21 percent.

Financials are taking the biggest hit. They re pretty well carrying the rest of the market down, said Helyn Bolanis, president of Parlan Financial Corp. in Sylvania Township.

It looks a little scary, doesn t it? These are the concerns across the board in the investment community, that there s weakness in the overall economy.

Eight of the 17 local firms are below $10 a share, compared with three a year ago.

The measures use stock price plus any paid dividends. The local performance mirrors national stock indices. The Dow Jones industrial average and Standard & Poor s 500 index each slumped 16 percent from Jan. 1 to June 30, and the Nasdaq was off 13 percent.

Locally, Tecumseh Products share return jumped 40 percent in the first half of the year.

Jim Nicholson, chief financial officer, said the gain was pushed by investor confidence. The firm, which plans to move from the Lenawee County town for which it is named to suburban Ann Arbor starting this week, makes compressors used in air conditioners and refrigerators.

If you look at the movement in our stock price last year, we were highly depressed because of a period of sustained losses and a troubled balance sheet, a lot of debt and not a lot of cash flow to repay that debt, Mr. Nicholson said.

Some investors considered the firm a potential candidate for bankruptcy, he added.

But last year the company sold its pump and engine-making operations to focus on compressors, paid down debt, and strengthened its balance sheet, Mr. Nicholson said.

I think the market has reacted to us taking those positive steps, getting back focused on the core product, and making other improvements, he said.

The company still is being hurt by a strong currency in Brazil, where it makes most of its compressors, and high commodities prices, Mr. Nicholson said.

Toledo s Owens Corning share value rose 13 percent over the last two quarters. Toledo s Health Care REIT s stock price declined from $46.69 a share to $44.50 a share, but its dividends of 68 and 66 cents boosted its total return to 3 percent.

But the other firms declining values catch the most attention.

Among those dropping are typically stable bank stocks, such as MBT Financial Corp. in Monroe, down 28 percent, and First Defiance Financial Corp., off 25 percent.

Steve Futrell, chief executive of Croghan Bancshares Inc., of Fremont, said the subprime lending crisis nationally and sometimes poor loans issued by some institutions dragged down many banks. His company s shares were down 19 percent for the first half of the year.

Our financial performance has been good as reflected by our numbers, but all you hear today is negative news being reported, and I m sure that has some influence on some people s buying habits, Mr. Futrell said.

Area firms in manufacturing, particularly the automotive industry, also were hit as part of the fallout of the struggling national economy and high oil and food prices.

Dana Holding, a Toledo maker of axles and other auto parts, emerged from bankruptcy Feb. 1, but its performance since then was down 58 percent. A spokesman declined to discuss its stock path except to say that others in its industry were down.

Dana officials had forecast the new stock would open at about $22 a share, but its first day of trading ended at $12.70 and since then the shares have traded mostly between $8 and $10.

The stock slumped in recent weeks to barely above $5. The share value could be helped by Dana s recent inclusion in the Russell 2000 small capitalization index used by some pension funds and other institutional investment funds.

Cooper Tire, in Findlay, which posted a 51 percent drop in stock value, was dogged by declining profits from increased raw-materials costs caused by the falling value of the dollar, increased product liability costs, and reduced sales volumes in North America.

The tire maker recently announced it would reduce tire production because of declining demand and expected shortages of raw materials. The move boosted its shares to their highest one-day increase since April.

Libbey, with a decline of 53 percent, was next to Dana as the poorest local performer. The local company is in the process of being removed from the Russell 2000 small-cap index a year of being added to it.

Greg Geswein, vice president and chief financial officer, said the maker of table glasses and plates has left few stones unturned in an effort to improve its stock. But the economy is hurting its efforts, he added.

The big piece of it is the restaurant business is down, and we re heavily tied to the restaurant business, Mr. Geswein said. Plus, high costs of natural gas, which fuels the furnaces used to make its products, resulted in a first-quarter financial loss.

If there was a strategy an investor could use to minimize losses, it might have been to concentrate on the six local stocks on the Nasdaq. They suffered an average total share decline of 9 percent. Those on the New York Stock Exchange were down 22 percent.

Contact Jon Chavez at:jchavez@theblade.comor 419-724-6128.